How to build Forex channels

 Determining the trend is the number one task of any currency trader. Some manage to go against the current trend in some way, but this is mostly a losing option. It is better to wait for a good moment when you can enter the market. In this article, we will discuss what trend channels are and how they relate to the financial market.
What is a trend?

A trend is like a map that you need to follow to make a profit. If we know which way the quotes are moving, this data can be used for our purposes. This is the main information that we can use to master the world. Or at least make some money.

A channel is a trend boundary whose breakout means a change in the trend. This is very well depicted in the drawing from Jack Schwager's book " Technical analysis. Full course”.

In this figure, we see a downward trend (that is, one in which the value of an asset decreases). What do we know from this picture?
1. If we open any deal for sale in mid-December, we can make a profit for at least 5 months.
2. The higher the deal is opened (read earlier), the more profitable it is.
We see that everything is elementary. But this is if you look at it in retrospect. In fact, only one in twenty traders wins. Why? This is because traders don't know how to build channels. This is such a complex topic that we will not be able to discuss it in detail in this article. A lot of literature has been written on this topic.

First of all, let's figure out what is considered a channel. You can see two lines on the chart that accompany the downtrend. The space between them is called a channel. These are certain limits of what is allowed, within which the trader will not be punished with losses.

Rules for building a bullish channel

There are two ways to build an uptrend channel.
1. First you need to draw a line of support. It is drawn based on the minimum closing points of Japanese candlesticks. After that, a line of the resistance level is drawn through the maximum closing points. We can use this channel to make forecasts for price increases.
2. Building an unconfirmed trend channel. Here you must first draw a resistance line (at the maximum closing points, we remind you), and then build a support level parallel to this line. In this case, forecasts are based on a lower price.

How to build a bear channel?

in this case, everything is simple. You just need to mirror the steps described above.
How to use a trend in trading?

The goal is considered achieved if the quote has reached the level of 10% of the entire width of the constructed channel. To make a decision when to enter the market inside the channel, you need to use one of the following methods:
1. Open a short position when the coveted 10% is reached.
2. Sitting in wait exactly as long until the reversal bar or candle. From the very beginning, we set the goal for half of the channel. If the price came to the center of the channel, then open another position for the coveted 10%.